Average Credit Score for Purchase Mortgages Hits All-Time High

The report noted that the increase in home purchase lending is being driven almost entirely by borrowers with high credit scores.

In fact, purchase mortgages for borrowers with sub-700 credit scores are flat to slightly down from levels seen a year earlier.

And only twenty percent of purchase loans doled out over the past three months have gone to borrowers with credit scores below 700.

This explains why the weighted average credit score for purchase loans hit an all-time high of 755.

That’s good news for the real estate market as a whole because it probably means these homeowners will make on-time mortgage payments and avoid foreclosure.

But it also means a lot of borrowers with marginal credit might be getting squeezed out by credit winners when it comes time to make an offer on a home.

And eventually when home prices are out of reach, these lower-credit score borrowers might finally get a chance to buy at a premium. That could create another crisis, though such an event is probably still years away.

In the meantime, let’s focus on the fact that second quarter purchase mortgage volume was up 15% from the same period a year earlier.

Additionally, early third quarter numbers show an 11% increase from Q3 2014.